Way to wealth
Investbank Merrill Lynch was named in honor of its founders - Charles Merrill and Edmund Lynch. Merrill Way to wealth - a typical embodiment of the American dream: a rags-to-kings. His parents were not particularly advantaged people. Sending his son to receive higher education, they could not contain it.
First, Charles worked part time to pay tuition, but money is not enough, and he was forced to leave college. He worked in the newspaper, trying to look for jobs in the amateur baseball team, in general, survived as best he could. At 22, settled a courier in the office of the textile company Patchogue-Plymouth Mills in New York. Use a person with incomplete higher education as a messenger - a little unreasonable, decided in this company and began to assign Charles more skilled work.
He also sought to prove that he knew how to work better than others, and two years later became director of this company. In 1909, Charles moved to a larger firm George H. Burr & Co, trading in paper. The enterprising 24-year-old boy created a new department where debt management and issuance of securities. Successes in this company, allowed Charles to put together a small fortune to start their own business. In 1914, at age 29, he opened the company Charles E. Merrill & Co, a year later, invited as a business partner, Edmund Lynch and renamed the company to Merrill Lynch.
The new firm specializing in securities trading. And the first secret of its success was a good selection of shares. One of the first among brokers and bankers, partners saw the future in that business, as a network of grocery stores. Until then, the U.S. products sold mainly small shopkeepers. Merrill Lynch helped to find the money pioneers of business networking shops - companies SSKresge (subsequently named K-Mart, and in 2005 was acquired by rival Sears) and Safeway Stores.
The deal, in which Merrill made not only the organizer, but also an investor, was one of the most successful. By 1931 Safeway Stores had had 3500 stores in all states, and by 1956, when Charles Merrill died, the company had 2 nd place in the retail market in the United States.
In 1928, almost a year before the Great Depression, Charles Merrill, intuitive successful investor, said several times that the U.S. stock market is overheated, and advised his clients to sell U.S. stocks. Followed this advice, then thanked Merrill - already in October 1929, these securities are worthless. Himself counselor was able to secure himself from the Depression. In 1930, when mass unemployment and hunger in the United States killed about 8 million people, Charles Merrill lived comfortably on his estate in Palm Beach in the hot Florida.
At this time he did not do business as usual (no stock market, banks are impoverished, who need financial advisers?). He received the profits from those stores, in the construction of which had previously invested money, - First National Stores, Safeway Stores, SSKresge and Family Circle.
Return
In 1940, Charles Merrill returned to the stock market. But his partner, Edmund Lynch had already died, and many of the savings were spent during the years of the Great Depression. Therefore, in 1941, Charles agreed to a merger with EAPierce and Company. The new firm has received more than a long name Merrill Lynch, Pierce, Fenner and Beane and became the largest at the time brokerage company in the world with offices in 93 U.S. cities.
By that time, Charles Merrill was already 54 years old, he was married a third time, had two sons and a daughter. Incidentally, the youngest son of James Merrill was the outstanding American poet. He won many prestigious prizes for collections of poetry, including the Pulitzer Prize. And it all started with the fact that secured father wanted to give her son a good education. James since childhood I studied foreign languages and literature. Father did not mimic many other financial magnates, forcing his son to continue his own business. He not only prevented the poetic enthusiasms son, but also published the first collection of poems. Later he becomes patron James: As a famous poet, it will create its own fund to finance the publication of works of talented young authors.
But back to my father. At 54, Charles Merrill was faced with a serious problem: he had a stock company, had the money, but customers are not added. Americans are living memories of the Great Depression, after which the country was only beginning to recover. Therefore, the stock market traded only very wealthy people, and customers such rank quickly snapping up competitors. And Charles decided to make the trading business accessible to all. His slogan was "Bring Wall Street to Main Street."
In English it sounded in rhyme: "Bringing Wall Street to Main Street", ie make securities available to the middle class. Last 16 years of his life, Charles Merrill has spent on promoting this idea. He launched advertising campaigns in newspapers, ordered advertising on big boards, which is available explaining the essence of the broker. He went even further, by organizing the country's present program to eliminate financial illiteracy. Charles Merrill and his staff conducted seminars around the country. In addition, the company provided funds for the nannies to families who wish to attend seminars, but did not know to whom to leave children.
While babysitting entertained kids, mom and dad listened to, how to make money on the stock exchange. In 1998, the magazine "Time" would write about Charles Merrill: "He made Americans a nation of shareholders. This was a joint project of the magazine "Time" and the TV channel CBS, which was called "People century: 20 people who changed our lives." Due to promote the exchange of trade, Charles Merrill was recognized as one of those people.
In 1940-1950 gg. new strategy brought the company's success. By 1956, when the founder died, Merrill Lynch had 115 offices in the United States, 570 staff and 100 freelancers. By modern standards it is comparable to the size of the Ukrainian bank from the category average, but in America the 1950's the company this size provides 10% of all transactions on the New York Stock Exchange. Within 6 years after the death of Charles Merrill saw the light of his first biography with an eloquent title: "Man-superprodavets.
In 1956, the company Merrill Lynch has been chosen from 7 candidates as the chief adviser and organizer of a public sale of shares of automobile giant Ford. Automobile companies bulk sale of shares has brought $ 600 million, while Merrill Lynch this year was the first, when the total volume of transactions exceeded organized a fantastic sum for those times in the $ 1 billion
Other successful transaction allowed the company to open offices in London (1960) and Tokyo (1964). Meanwhile, the company has begun to appear more respectable clients - in 1964, Merrill Lynch was an organizer of the issuance of debt securities by $ 100 million for the Communications Satellite Corporation (COMSAT), and in 1971 launched a campaign under the slogan "Merrill Lynch is bullish on America "(can be translated as" We're playing at improving America "and" We're playing at the price hike of America "). 1971 was a watershed for the company.
Until now, only Merrill Lynch traded shares of other companies, now the company went public, selling its shares on the exchange. In 1974, its logo was a symbol of the campaign - the bull, embodying uptrend. And in 1978 the company acquired international investment bank White, Weld & Co.
Merrill Lynch has sought to take a strong position in the rapidly growing Asian market. In 1982 he opened an office in Hong Kong, in 1985 he received the status of the regular members of the Tokyo Stock Exchange. Starting next year, companies' annual reports were published not only in English but in Chinese and Japanese languages. The Asian world is very conservative and usually do not trust foreigners. But managers Merrill Lynch failed to agree on their representation, even in communist China. Shanghai Office was opened in 1993
In 1995, the company bought Smith New Court, a large trader of shares, Merrill Lynch has further expanded its presence in the U.S. stock market. But this is not enough: the owners of the company, believing in its own slogan, which states that the market will only grow, continue to open new offices around the world and absorb competitors. In 1996-1998. were bought by Australian company McIntosh and Centaurus, Thai Phatra Thanakit Securities, Spain's FC Inversiones Bursatiles, Canada Midland Walwyn, British Mercury Asset Management and opened 33 new offices in Japan. It seemed that success would never end, because in 1997 the total assets managed by Merrill Lynch exceeded $ 1 trillion.
To down
All the previous successes of the company did not give reasons for the negative predictions, and Merrill Lynch continued to develop its business worldwide in early 2000-ies. In 2004 it acquired the Anglo-American company Entergy-Koch LP, gas, and trading in securities. In 2006, opened a joint finance company with Japanese Mitsubishi UFJ Financial Group. In 2007 bought First Republic Bank, as well as the mortgage lender First Franklin. Then there was really no cause for concern: profit for 2006 amounted to $ 7,5 billion
The first official report on the losses the company began to appear only in October 2007 - for the III quarter of the bank lost $ 2.3 billion mainly due to write-off of bad debts. Since then the situation only worsened. For the entire 2007 loss amounted to $ 8.6 billion for the I quarter 2008 the company was without its $ 1.97 billion, for the II - $ 4,6 billion Thus in II quarter has already begun to save on staff: in April, were dismissed 4 thousand . people. It did not help: for the III quarter the company incurred losses amounting to $ 5.1 billion, but by that time the company's management could not already buy Corvalol - September 15, officially announced the sale of Merrill Lynch to another bank - Bank of America.
Why such a giant, existed nearly a century, so quickly went to the bottom? The reason is the same for which ruined many other banks, including rival Lehman Brothers. So-called analysts have underestimated the risks of mortgage securities. In addition, rating agencies, many were misled by assigning the most problematic, as it turned out, the highest rating securities. Wrong not only analysts - management of Merrill Lynch in the last year of existence were similar to the behavior of a mentally unhealthy person. The bank then issued debt securities, to patch holes in the budget, then buying brokerage firms abroad.
For example, January 15, 2008 reports on the issue of securities by $ 6.6 billion and on 29 July the bank sells the shares to raise $ 8.55 billion That is, as if the company does not have enough money. But in the same year appear and news about new spending - June 24, reported the purchase of a brokerage company in Chile - Ureta y Bianchi Corredores de Bolsa SA Even earlier, on January 23, when it was already aware of the huge loss last year, opened a new office in Moscow, one of the most expensive cities in the world.
It is significant and what is still Nov. 1, 2007 left the company chairman, Stanley O'Neal, who was accused that he did not notice the onset of the mortgage crisis. Even if the American press reported that the former Director-General proposes to sell the bank rivals - the bank Wachovia. He was replaced by John Sein. The new boss had a very good experience, before that, he was chairman of the Board of Directors of the New York Stock Exchange. But the situation has not improved. How to calculate later analysts, from July 2007 to July 2008 Merrill Lynch losses totaled $ 19.2 billion, or $ 52 million a day.
Clouds are gathering over the company. Of New York threatened to trial for the falsification of statements, in which the firm tried to hide data on actual losses from the mortgage crisis. Similar actions had threatened to press and the authorities of other states. Questions really there is a lot: if from July 2007 to July 2008 is officially recognized by Merrill Lynch losses totaled $ 19.2 billion, why the agency Bloomberg reported in September that the total bank losses from the mortgage crisis have exceeded $ 51.8 billion?
In the history of the sale of the bank not played an important role bankrupt competitors - Lehman Brothers. The new owner - Bank of America - also held talks with the leadership of Merrill Lynch and Lehman Brothers. But at the last moment the U.S. authorities have indicated that they would not help Lehman Brothers, and the company refused to negotiate with all potential buyers.
Sale of Merrill Lynch was the end of the myth of the omnipotence of investment banks. After the buyer made an ordinary commercial retail bank. It turned out that these structures are less susceptible to the crisis, compared with investment banks like Merrill Lynch. While Bank of America also suffered from the crisis - its losses amounted to $ 3 billion
But the sale - not the end. December 12 Bank of America reported that 30-35 will be forced to fire thousands of employees Merrill Lynch over the next three years. This is 11,4% of all bank employees. How to calculate the direction, the savings from this reduction would be $ 7 billion annually.
Now Bank of America operate 247 thousand., Of which 61 thousand. - Staff of the former Merrill Lynch.
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